DTI imposes P8.40 per bag provisional duty on imported cement

The Department of Trade and Industry (DTI) imposed on Thursday a provisional duty on cement imports in an effort to protect local manufacturers of the construction raw material.

Trade Secretary Ramon Lopez announced the provisional safeguard duty would amount to P8.40 per bag on imported cement.

"Again this is a provisional duty (effective for 200 days) in the form of cash bond on imported cement, while the Tariff Commission undertakes and concludes its formal investigation," Lopez said in a statement.

Imposing safeguard duties, the Trade chief said, are legitimate tools in trade remedies allowed under our international commitments such as in the World Trade Organization to assist industries which have experienced a surge in importation and a decline in sales and profitability.

The country's cement industry receives no tariff protection as imports currently enter at zero duty, according to Lopez.

"In the case of cement manufacturing, imports of cement increased from only 3,558 metric tons in 2013 to more than 3 million metric tons in 2017; and the share of imports (from non-manufacturer or 'pure' traders) increased from only 0.02 percent to 15 percent during the same period," the Cabinet official said.

"Equally important, the industry experienced a sharp decline in income (earnings before interest and taxes) of 49 percent in 2017," Lopez said.

With the elements of surge and injury clearly established, the Trade chief said the DTI is mandated to impose a safeguard duty.

"In determining the amount of duty, however, the DTI balances the interests of all stakeholders—and has given particular attention to ensuring that supply remains steady and that prices will not increase," he said.

The Cabinet official also underscored the importance of cement industry in the country as it is a critical input to infrastructure such as the Duterte administration's "Build, Build, Build" program and to the housing sector.

"As such, we have to ensure its availability (right price, top quality, right place, sufficient volume) in both the short- and long-term. Having a vibrant domestic industry, under a contestable market where legitimate imports can freely enter, is important in ensuring this," Lopez said.

"But relying solely on imports and being at the mercy of global supply and demand situation is risky and irresponsible considering changes in global demand and supply conditions, and will only lead to too much dependence on imports, leading to perennial trade deficit," he said.

The Trade chief said the provisional P8.40 per bag safeguard duty will ensure price and supply stability as:

- Imports will still be allowed and will continue, ensuring strong competition;

- There is currently enough domestic capacity of 35 million MT, to meet demand estimate of 25 million MT, but which capacity must still be encouraged to increase, given continuous growth in demand; and,

- We are requiring the cement manufacturers to maintain their current retail price levels.

"We will closely monitor the selling price of cement manufacturers and ensure that they will not implement increases," Lopez said.

"At the same time, it will encourage existing and new players to build additional facilities to attain a healthy level of domestic capacity that will address our perennial trade deficits, and ensure long-run supply of cement needed for public infrastructure projects and for building homes for Filipinos; and more importantly generate more jobs here in the country, instead of helping job generation in other countries every time we import," he said. —LDF, GMA News